How Much Does Medicare Part B Really Cost?

The Standard Premium

Medicare Part B covers outpatient services — doctor visits, preventive care, durable medical equipment, outpatient surgery, mental health services, and more. Every Medicare beneficiary enrolled in Part B pays a monthly premium. The standard premium amount is set annually by the Centers for Medicare & Medicaid Services (CMS) and changes each year based on program costs.

Most beneficiaries pay the standard amount, which is typically deducted directly from their Social Security check. This is the baseline cost that applies to the majority of Medicare enrollees.

Note: We intentionally do not quote a specific dollar figure here because the standard premium changes annually. Check Medicare.gov for the current year's amount.

Income-Related Monthly Adjustment Amount (IRMAA)

Here is where many retirees are caught off guard. If your modified adjusted gross income (MAGI) exceeds certain thresholds — based on your tax return from two years prior — you pay a higher Part B premium. This surcharge is called the Income-Related Monthly Adjustment Amount, or IRMAA.

IRMAA operates on a tiered scale. The higher your income, the larger the additional premium. The income thresholds and corresponding surcharges are updated annually. For married couples filing jointly, the thresholds are different from individual filers.

Two important details about IRMAA that surprise retirees:

• The two-year lookback: Your IRMAA for this year is based on your tax return from two years ago. If you had a high-income year right before retiring (selling a business, exercising stock options, taking a large distribution), that income may push you into a higher IRMAA bracket even though your current retirement income is lower.
• Life-changing events: If your income has dropped significantly due to retirement, divorce, or other qualifying life events, you can file Form SSA-44 with Social Security to request that a more recent year's income be used instead.

The Part B Deductible

Beyond the monthly premium, Part B has an annual deductible. Before Medicare begins paying its share of covered outpatient services, you must meet this deductible each calendar year. After the deductible is met, Medicare typically pays 80% of the approved amount for covered services, and you pay the remaining 20% coinsurance — unless you have supplemental coverage (like a Medigap plan) that covers that coinsurance.

The 20% Coinsurance

After meeting the deductible, the standard Part B cost-sharing is 80/20: Medicare pays 80% of the approved amount, and you pay 20%. With Original Medicare alone, there is no annual cap on that 20%. If you have a year with significant outpatient care — surgery, imaging, specialist visits — the 20% coinsurance can accumulate substantially.

This is one reason many people pair Original Medicare with a Medigap supplement. Plans like Medigap Plan G cover the 20% coinsurance (after the Part B deductible), effectively capping your annual outpatient exposure.

Late Enrollment Penalty

If you do not sign up for Part B when you are first eligible and do not have qualifying coverage through an employer, you may face a late enrollment penalty. The penalty is an additional 10% of the standard premium for each full 12-month period you could have had Part B but did not sign up. This penalty is added to your premium for as long as you have Part B.

The Total Picture

The "cost of Part B" is not a single number. It is a combination of the monthly premium (potentially adjusted for income), an annual deductible, and ongoing 20% coinsurance on covered services. For retirees who use healthcare frequently — particularly in the first year or two of retirement — these costs can be more significant than the premium alone suggests.

"When someone says Part B costs a certain amount per month, they are usually quoting only the premium. The deductible and the uncapped 20% coinsurance are the parts that catch people by surprise."